European Commission

On 17 May, OCC, the US clearinghouse that is the largest equity derivatives clearinghouse in the world, was placed on CreditWatch with negative implications by the ratings agency, S&P.

The idea of trade reporting was central to the 2009 G20 financial reform response to the global crises that swept through international markets. The idea was a simple one; get all trading counterparties to report their transactions and then global regulators would have previously impossible transparency into global financial activities. As with many things, however, theory and practice and have been far removed from one another.

Thomas Murray Data Services recently met with the European Commission market infrastructure division in Brussels. Here is a summary of the main talking points arising from our meeting:

The 15 December 2014 deadline for a CCP to be classed as a QCCP (Qualifying CCP) is looming under Article 497 of the Capital Requirements Regulation (CRR). There are many discussions regarding the dates by which the transitional relief period runs out which could have knock-on consequences on the capital that clearing members are required to hold against their exposures to these CCPs.

The EMIR (European Market Infrastructure Regulation) authorisation process has brought about a ‘huge change’ to the clearing world, at least according to the panellists at the recent Futures Industry Association IDX Conference in London. On top of the challenges in becoming authorised under new regulatory regimes, there are also issues of cross border equivalence to be reached by the regulators in each jurisdiction, as well as the challenge to be recognised as a Qualifying, or ‘Q’ CCP.